INSIDE (THE BELTWAY) SCOOP – JENNIFER ZEITZER Created by on 06/19/2012

Temperatures aside, it is shaping up to be a very hot summer in Washington with partisan tensions creating legislative gridlock as Congress attempts to resolve differences on a long list of unfinished business. Interest rates on student loans, funding for highway construction and repairs, the fiscal year (FY) 2013 appropriations bills, and reauthorization of farm programs are just a few of the issues on which lawmakers must find common ground by the end of September. Progress has been slow thus far, and an upcoming break over the Fourth of July followed by the five-week August recess will leave lawmakers with only a short window of time to make key decisions, increasing the likelihood that nothing more than temporary extensions of existing programs will be enacted. The one exception may be the farm bill that is currently being debated in the Senate under the bipartisan leadership of Senate Agriculture Committee Chair Debbie Stabenow (D-MI) and ranking member Pat Roberts (R-KS). Stabenow has expressed confidence that the bill will pass if Senators can reach an agreement on the number of amendments to be considered before the final vote. Negotiations related to Senate farm bill amendments will continue during the week of June 18th. Although the fate of the farm bill is unclear at the moment, many on Capitol Hill believe that Senate passage of the legislation will force the House to take action on it as well.

According to a memo from Majority Leader Eric Cantor (R-VA) to the Republican conference, in addition to the farm bill the House’s summer legislative agenda will include consideration of measures aimed at addressing job creation and the economy, reducing spending, and shrinking the size of the federal government. The memo divided the next few months into three periods – Memorial Day to Father’s Day; Father’s Day to Independence Day; and Independence Day to August. It noted that the House will continue working on FY 2013 appropriations bills, although there was no mention of when the bill funding the National Institutes of Health will be considered. Postal reform legislation (which could include action related to the travel amendments issue) is expected to come to the floor sometime in July.

One issue that does not appear on either the House or Senate’s current agenda is the pending automatic budget cuts that will go into effect in January through the process of sequestration. While sequestration is deeply unpopular with both Democrats and Republicans, no consensus has emerged on what to do about it. President Obama continues to stand by his threat to veto any legislation to cancel the sequestration as a means of forcing lawmakers to make tough choices about spending and taxes. As a result, Congress’s only option is to agree on a broader deficit reduction plan, an outcome that seems impossible to achieve before the November elections. For now, lawmakers are focused on seeking information from federal agencies about how the budget cuts will affect specific programs. Senator John McCain (R-AZ) has threatened to attach to any bill moving through the Senate an amendment forcing the Defense Department to explain the impact of sequestration on military operations. On June 7th, Representative Ed Markey (D-MA) sent a letter to Health and Human Services (HHS) Secretary Kathleen Sebelius requesting concrete information on how HHS will implement the automatic budget cuts. The Markey letter specifically mentioned medical research, stating that the reductions “could stop vital, life-saving research in its tracks.” An earlier analysis released by the Federation of American Societies for Experimental Biology projected that extramural research at NIH would face an $2.8 billion (11.1 percent) reduction if sequestration goes into effect.

Concern about the looming sequestration is also rising in the private sector and among federal agency personnel. Agencies and any organizations that rely on federal contracts are faced with decisions on hiring, budgeting and projects for FY 2013 without any assurance about how much they will be able to spend or generate in revenue. “Uncertainty about the resolution of fiscal policy early next year is weighing on the economy, we think, diminishing people’s and businesses’s spending this year,” said CBO Director Douglas W. Elmendorf. “It’s an issue now and will increasingly be an issue in the second half of the year in terms of people’s decisions,” according to Elmendorf. A similar article in Politico focused on the Worker Adjustment and Retraining Notification Act of 1988 that requires employers to provide notice 60 days in advance of covered plant closings and mass layoffs. Private, for-profit and nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government.

Amid the uncertainty around the unfinished FY 2013 appropriations bills and sequestration, the Office of Management and Budget (OMB) released several memos providing guidance for federal agencies as they begin to develop their FY 2014 budget submissions. OMB warned that due to discretionary spending caps in the Budget Control Act (BCA), “hard choices need to be made to continue to cut lower-priority spending in order to create room for the most effective investments in areas critical to economic growth and job creation, including education, innovation, infrastructure, and research and development.” Agencies were directed to prepare FY 2014 spending plans that are five percent below their FY 2013 budget request. The first OMB memo repeated the President’s expectation that Congress can and must act to avoid sequestration. OMB also instructed agencies to demonstrate use of evidence throughout their FY 2014 budget submissions. In a separate guidance document outlining science and technology priorities for the FY 2014 budget, OMB and the White House Office of Science and Technology policy asked agencies to give priority to research and development investments that that have the potential to foster biological innovations, in particular those that enhance translational sciences and efforts to accelerate innovation.